The Profiteers

by Sally Denton

  The firm gave him a string of small cases to try, and he fought some of the best insurance defense attorneys in the area. After losing his first five cases, his confidence faltered. But that changed with his first victory, and soon he had attained a reputation as a budding young trial lawyer. Over the next decade, that reputation grew. Eventually he formed a plaintiffs’ firm with several colleagues, and as the senior partner would also be the rainmaker. In that role, he felt pressured to “win the big one,” as he later put it, in a competitive legal environment.

  Less than a decade later, his personal injury judgments had gained attention in the statewide legal community, and in 1987 he was elected president of the California Trial Lawyers Association. By then, his passion for the legal profession—and especially for the lawyer’s role in helping people—had been galvanized by the adage “First, let’s kill all the lawyers.” The Shakespearean reference was much in vogue at the moment, tarnishing the entire profession as inhabited by unethical greed mongers. (In fact, the phrase, as used by Shakespeare, reflected positively on lawyers.) Gwilliam embraced a one-man crusade to counter that perception, setting forth the tenets of trial lawyers: “We don’t cheat. We do not suborn. We do not fabricate. We do not lie to clients or for clients. We do not file frivolous suits, and we do not answer or defend against claims of merit with tricks or chicanery.”

  Citing the successful cases brought against the Ford Pinto, the Dalkon Shield intrauterine device, asbestos products, and more, Gwilliam saw the elevated role of the plaintiffs’ attorney to bat “on behalf of the general public against the insensitive and uncaring [corporate defendants], removing from the marketplace . . . life-endangering products.” Throughout the 1990s and into the twenty-first century, Gwilliam’s legal victories would multiply, bringing national attention to his accomplishments and to the firm. Despite recurring bouts with the demons that had plagued him since childhood—alcoholism and work stress led to two divorces—he would become a role model for trial lawyers throughout the state of California dealing with the same pressures.

  He became involved with Trial Lawyers for Public Justice: an organization consisting of three thousand of the most accomplished and revered lawyers in the nation. TLPJ “takes on issues that other lawyers won’t,” Gwilliam described it, “such as important environmental battles, consumer law matters, civil rights cases, and issues relating to court access.” His life mission had become twofold: to “help the average person to pursue justice against the biggest and most powerful companies in the world,” and to be an inspiration and advocate for trial lawyers. Finally finding marital happiness, he wrote a book about his deeply personal journey into sobriety and handling the lifestyle stress of the high-powered litigator, which led to requests for motivational lectures and legal ethics seminars throughout the state of California. That exposure, along with his numerous multimillion-dollar jury verdicts, made him a household name in legal circles.

  By 2008, Gwilliam had tried more than 180 jury cases and had expanded his area of practice beyond personal injury into employment law, wrongful termination and employee discrimination and harassment, civil rights, and whistleblower protection. Some of his verdicts were the largest in California.

  That spring, when Gwilliam learned that Bechtel had laid off 440 career employees at the Livermore Lab, he was prepared for the onslaught of phone calls. After forty years of practicing law, he was certain that he could not stand idly by, and that he would represent those employees. “I’m the only lawyer in the entire Bay Area who has ever taken on the Lab,” Gwilliam said in an interview. “When this case came down, I was familiar to the plaintiffs’ union, the Society of Professional Scientists and Engineers, so employees started calling the law office immediately. First, one called. Then another fifty. I was ultimately contacted by almost half of those laid off. The union was incensed, and there was almost a riot out there. The cases were very clear to me. They were wronged, and someone had to help them. Clearly, the federal government wasn’t going to.”

  Of the 440 nuclear weapons scientists, researchers, assistants, and supervisors with long years of dedicated service, Gwilliam took on 130 as clients. “When they walked through our doors, most had lost more than just a paycheck. They had lost careers, sources of personal pride, and, in some cases, the very center of their lives. Their average age was fifty-four, and their average length of service was more than twenty years.” An Alameda County superior judge in Oakland selected five of Gwilliam’s clients to be test cases in a lawsuit involving all 130 plaintiffs with similar claims for wrongful termination. Each had additional claims for age discrimination—a phase of the case that would be tried later.

  After a long five years during which Gwilliam’s firm spent more than a million of its own dollars despite receiving no attorneys’ fees—an Alameda County jury found in favor of the five plaintiffs on their contractual claims, deciding that LLNS had fired them without reasonable cause. The jury awarded them $2.7 million for lost wages and economic loss. With interest, the average award for each of the 130 employees was expected to be about $600,000—or an extrapolated value total of around $78 million. LLNS appealed the decision, and when it refused repeatedly to enter into settlement negotiations, Gwilliam accused it of using delaying tactics. “It’s clear from the record the Bechtel Group is doing everything they can to delay it, block it, drag it out, because they want to squeeze the older clients. It is a blatant and obvious delay strategy to drive these older people to their knees. Many of them have already lost their houses, filed bankruptcy, and have challenging health problems, and the sad truth is that LLNS wants to delay until they’re dead. The plaintiffs have gone through long depositions, extensive medical examinations, two trials lasting six weeks, in litigation that has dragged on for years. All they’ve won is what they lost in wages. And still, no one has yet seen a dime.”

  To further exacerbate the miscarriage of justice, according to Gwilliam, LLNS was “trying to pass the millions of dollars of damages for the illegal layoffs, as well as astronomical attorneys’ fees, to the taxpayers through the DOE.” Danielle Bryan, executive director of POGO, followed the case closely, “tracking the misuse of federal funds by government contractors to defend against lawsuits.” Bryan testified that the government’s reimbursement to private contractors for their attorneys’ fees and costs “creates an incentive for contractors to litigate as long as possible—using federal funds—in order to avoid a finding of liability.”

  Gwilliam submitted requests to DOE under the Freedom of Information Act asking the amount the US government had paid LLNS’s private San Francisco law firm in attorneys’ fees—a figure that Gwilliam estimated to be at least $15 million. The firm, Orrick, Herrington, “frequently had as many as four to six lawyers for even routine motions,” he observed. “The defense firm has two hundred times as many lawyers as I have. There are twelve hundred of them and six of us. Three of our lawyers, including my partner Randy Strauss and my associate Rob Schwartz, have devoted five years to working on this case. We’re like commandos, and we’re going to prevail,” he said in 2015, with his conviction that “truth will out.”

  In October 2015, after seven years of litigation, the Lawrence Livermore Laboratory agreed to pay $37.25 million to 129 of its workers to settle their lawsuits. “As soon as the Lab was ‘privatized’ by the George W. Bush administration in 2007, they began plans to lay off their older, most experienced workers in order to save themselves money,” said Gwilliam. “The evidence proved that this layoff was organized and implemented primarily by the Bechtel Corporation. There had not been a layoff there for thirty-five years before that.” The company had won the trial relating to age discrimination claims, and under the terms of the settlement did not admit any wrongdoing had occurred.

  CHAPTER FORTY

  The Exxon of Space

  “Bechtel is one of the great creations of California in the twentieth century, like Stanford University, like Kaiser Permanente, like Apple Computer,” s
aid California state historian Kevin Starr. “It’s part of the establishment, part of the way America organizes itself.” California journalist Mark Dowie wrote of “Bechtel’s phenomenal metamorphosis from muleskinner to sovereign state”—a state that was “indistinguishable from the company itself.”

  By 2015, it was clear that Bechtel had its own foreign policy agenda, which the company relied upon and from which it benefitted. Bechtel routinely worked with public officials to write legislation that benefitted Bechtel. It kept its hand in the decision making of both public policy and foreign relations through its relationships in Congress. It gave robustly to the political campaigns that would further its interests. In one of the more recent political cycles, Bechtel Group spent $6.2 million in contributions and another $6.2 million on lobbyists. During the same cycle, Bechtel National spent $561,000 in political contributions and $4.3 million on lobbyists. While Bechtel’s contributions have been distributed almost exclusively to Republicans, in recent years, it has doled out more money to an increasing number of high-level Democrats in states such as California and New Mexico, where the company hopes to limit government oversight of management at the national nuclear labs. Between 1999 and 2013, Bechtel entities received 4,108 government contracts, primarily from the Departments of Energy and Defense, totaling $40 billion.

  Even though the jury trial in the Livermore wrongful termination lawsuit exposed the dark side of the for-profit model in the nation’s nuclear weapons complex, Bechtel remained untouchable. Senator Dianne Feinstein, a longtime and fervent lab supporter and a top recipient over the past twenty years of Bechtel’s financial largesse, seemed baffled to learn that Livermore had been privatized. Chair of the Intelligence Committee and the Appropriations Subcommittee that oversees NNSA’s budget, Feinstein questioned the competency of the lab directors. “I am really concerned, because these labs used to be pristine,” Feinstein, whose husband is on the University of California Board of Regents, remarked while criticizing the Bechtel-led team’s long history of cost overruns. Like many of her colleagues in Congress, Feinstein expressed a lack of understanding of the degree of privatization involved in the nation’s nuclear weapons laboratories. She expressed dismay that the lab directors behaved like corporate actors rather than government functionaries, only to be told that, in fact, they were corporate players.

  In recent years, a string of government oversight investigations revealed egregious wrongdoing and safety violations at the Bechtel-managed sites. A congressional commission, led by former undersecretary of the army Norman Augustine and retired admiral Richard Mies, concluded in 2014 that the privatization of the nuclear weapons laboratories had resulted in a “dysfunctional management and operations relationship,” and “uneven collaboration with customers”—the “customers” being the DOE.

  Bechtel’s multibillion-dollar contract to clean up the Hanford nuclear facility in eastern Washington came under fire by the federal government. Covering more than 580 square miles, the World War II–era plutonium production site was considered the most contaminated land in North America. Its nine nuclear reactors produced an estimated 43 million cubic yards of radioactive waste, and 475 billion gallons of radioactive wastewater were released into the ground. It is the biggest, most toxic nuclear-waste site in the Western Hemisphere. Hanford had changed from a nuclear weapons base to “the most costly environmental remediation the world has ever seen,” according to one account. In 2000 Bechtel received the $4.3 billion deal for the cleanup, which the company estimated would cost $14 billion to complete. But eleven years later, with the job still uncompleted, Bechtel predicted that the final cost would be more than $120 billion.

  Whistleblowers on the project complained to the Obama administration that Bechtel was “as toxic as the nuclear waste they’re tasked to clean up,” claiming that “Bechtel rushed through shoddy design plans in order to pocket some quick cash,” according to the Seattle Weekly. Whistleblowers claimed that Frank Russo, Bechtel’s director of the project and the so-called hatchet man who organized the Livermore layoffs, harassed and retaliated against them.

  Dr. Walter Tamosaitis, a systems engineer employed for more than forty years by a Bechtel subcontractor, claimed Russo ordered him fired after he reported safety failures at the site. In 2014 the Ninth Circuit Court of Appeals reversed a lower court’s decision and determined that Tamosaitis had a constitutional right to a jury trial in his legal case against the DOE, in which he claimed he was demoted for speaking out. “Hanford is a long-term threat to humanity,” declared Tom Carpenter, head of a Hanford watchdog group based in Seattle.

  After five years of litigation, Tamosaitis agreed in the summer of 2015 to a $4.1 million settlement of his federal whistleblower retaliation lawsuit. Called a “long overdue justice for a whistleblower who may have changed the course of history by preventing a nuclear tragedy,” by a spokesman for the Government Accountability Project in Washington, the victory was lauded by antinuclear activists. “It was absolutely terrifying what Bechtel was planning at Hanford. It was a complete gamble with public health and safety, all to earn millions in bonus money for getting a job done, regardless of whether it was disastrous for the Pacific Northwest.” Bechtel would be fined $800,000 after DOE investigations concluded the company had failed to follow safety guidelines it had agreed to more than a decade earlier. Also in 2014, the union representing the employees at Livermore requested a DOE investigation of LLNS for allegedly fabricating a $280 million budget shortfall to justify the 2008 employee layoffs. That year too the newly appointed head of NNSA, former air force lieutenant general Frank G. Klotz, received a waiver from DOE allowing him to make decisions involving and affecting Bechtel, even though his ties to the company involved consulting on billions of dollars’ worth of NNSA contracts. “After consultation with the Office of the Counsel to the President, I have determined that it is in the public interest for you to participate in matters relating to Bechtel,” wrote Susan Beard, the DOE assistant general counsel and ethics official, in response to complaints about the blatant revolving door. “Substantial national security challenges require your expertise and judgment in making sound decisions on major defense and public security programs, several of which involve Bechtel or one of its subsidiaries.”

  In what the media dubbed “the Valentine’s day release,” on the night of February 14, 2014, a drum of radioactive waste processed at Los Alamos leaked at the nation’s only permanent repository. Stored in an underground salt cavern at the Waste Isolation Pilot Plant (WIPP) in Carlsbad, New Mexico, the fifty-five-gallon drum cracked and almost burst, contaminating twenty-one employees. The leak raised questions about the lack of safeguards taken by the Bechtel-led management team at the lab.

  Still, Bechtel’s fortunes in the nuclear industry continued to thrive. “Bechtel has designed or built more than half of this nation’s nuclear power units, and worldwide has had a significant presence,” said Bechtel Nuclear’s president, Jim Reinsch. “Its procurement programs are world-class . . . its safety record in the nuclear field is second to none.” Indeed, the company, and its numerous partnerships and consortiums, received millions from DOE to build, design, license, and deploy the world’s first commercialized small modular nuclear reactors (SMRs). The Bechtel Marine Propulsion Corporation, a wholly owned subsidiary of the company, received a five-year contract from DOE to operate the Bettis and Knolls Atomic Power Laboratories. That project, worth between $6 and $9.7 billion, operates the navy’s nuclear reactor–powered warships, including aircraft carriers and submarines. The company completed a US Missile Defense Agency project in the Marshall Islands in 2013 and received a $7 billion contract for US Navy nuclear propulsion parts that same year. In 2015 Bechtel-led Consolidated Nuclear Security LLC teamed with NNSA and the US Army Corps of Engineers for the construction of the Uranium Processing Facility Site at the Y-12 National Security Complex. The $6.5 billion project was billed as NNSA’s largest-ever construction project. A Bechtel corporate press release
described it as a “multibuilding, state-of-the-art complex for enriched uranium operations related to nuclear security including assembly, disassembly, [and] dismantlement.”

  Meanwhile, the company further diversified its corporate footprint throughout the United States, with projects as disparate as commercializing space and solar power. Joining Google founder Larry Page and the company’s executive chairman, Eric Schmidt, along with film director James Cameron, Bechtel invested heavily in Planetary Resources to set up fuel depots in space. “Mining is an industry they are involved a lot in on Earth,” Eric Anderson, the founder of Planetary Resources, said of Bechtel. The company’s goal is to search for water and mineral-rich asteroids. “We want to become the Exxon of space.” The sixty-one-year-old Riley Bechtel declined to reveal details about the venture, except to describe the mission as “ambitious, but they’ve assembled a world-class team to succeed.”

  When Riley stepped down as chairman and CEO in 2014 after being diagnosed with early-stage Parkinson’s disease, he turned over company control to his only son, Brendan Bechtel. Although Brendan, a graduate of Middlebury College in Vermont with a degree in geography, and with dual master’s degrees from Stanford in business and construction engineering and management, was named president and COO, Riley fast-tracked longtime employee William N. Dudley as a placeholder CEO while the thirty-year-old Brendan gained experience—marking the first time in the company’s 116-year history that a non–family member would hold the title of CEO.